Think Big
<h>For António Bernardo,</h> Member of the Global Executive Committee of Roland Berger, 'thinking big' is an essential ingredient for European competitiveness. He shares his views on the Best of European Business competition in this interview with the competition's Portuguese media partner, Jornal de Negócios. How did the idea for the Best of European Business award come about? Roland Berger is today one of the world's largest strategy consulting firms and the only major European company in this sector. This greatly influences the way we think and work. We found it was time to highlight some European entrepreneurial success stories. We ran a trial run of this award in France in 2004 and it went very well. It caught the attention of high-ranking government officials and top managers in the French business world. Based on this favorable experience, we decided to expand the competition to initially include seven countries: Portugal, Spain, Italy, Poland, the United Kingdom, France and Germany. Why did you choose these countries? They were the countries where we could most rapidly develop the process and form juries of high ranking academic and business leaders. Will there be further rounds of the award? We intend to hold the Best of European Business award events every year, and to include other countries next year. The Netherlands, for instance, could already have participated in this year's competition. What are the objectives of this initiative? Above and beyond awarding the prizes, we wish to stimulate successful European companies to create a certain optimism and a positive outlook for the development of European business. This is best done by highlighting cases of business excellence, many of which are global references already. Not all European industries are underperforming in terms of their North American counterparts. In some sectors, such as chemicals, aerospace, and telecommunications we are the clear leaders. | ||||||
Then what is the problem? I think in Europe, we simply don't manage to mobilize business leaders and the population in such a positive way. This is really a cultural problem and a problem of mobilization. The same is true in Portugal: our problem is not only the government, but also society and business. The government can't do business. It can create the legislative framework, act as regulator and create the infrastructure and conditions for businesses to develop. The award strives to revive the discussion of the Lisbon Agenda at the business level. Aren't the goals laid out in the Agenda utopian? The Lisbon Agenda was an excellent objective to strive for. I wish it weren't utopian. But when we look at it now, five years later, we have to realize that very little has been done. The discussion is still very political at a time when concrete action is required. The business world should be much more closely involved. What problem is Europe facing today? In Europe and above all in Portugal, the problem is lack of growth. We are witnessing great heterogeneity in Europe. Some countries like Ireland, Sweden, Spain and the UK are growing, yet some other very important economies like Germany and Italy are practically stagnating. The same is happening with the companies. Therefore, well performing companies should be singled out and commended for their achievements. What is the secret of these successful companies? We are reaching the conclusion that in many success cases, the solutions found are not all that difficult. They are clearly focused strategies, efficient management and decision making processes and great entrepreneurial spirit. This is not rocket science. How did Portuguese companies fare compared to their European counterparts in the selection process? In terms of innovation, we have many interesting candidates when comparing companies in Portugal. But when we compare them with German or French companies, clear deficits emerge: in the number of registered patents and in R&D spending as a percentage of sales. Spain, on the other hand, is similar to Portugal. | ||||||
Nationality is a problem then? Entrepreneurial success has no nationality. And I think this will be one of the important conclusions we can draw from the Best of European Business award. Our deficit in Portugal is not the quality of our workforces, but rather the quality of organization and management. Of course, the big German and French corporations have a much greater critical mass than Portuguese companies. But I don't see how this should prevent Portuguese companies from competing on par with them when it comes to innovation. In terms of the criterion "new Europe" will we have greater difficulties in competing with the other countries? Unfortunately, yes. There are few interesting candidates in this category. Nevertheless, we were surprised by some medium-sized Portuguese companies who expanded their presence in Central and Eastern Europe. Some of them are key players in open industries. German and French companies are the natural investors in this region. But even in Italy and Spain, attention seems to be focused more on CEE countries than in Portugal. How did Portuguese companies fare in terms of growth and value creation? The companies we selected did very well. On average, the performance may not have been as good, in particular in the last two or three years. To be considered well-performing companies, the companies had to show growth rates of above 10%. The best companies are not affected much by economies that offer only marginal growth, because they take recourse to new markets and adjust their portfolios to economic conditions. But if we were to analyze the long list, we could find substantial differences in performance, in particular compared to Spain. | ||||||
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How did Spain manage to turn medium-sized Spanish companies into global leaders, as they have, for instance, in retail banking and the construction sector?
We thought about this with the President of the Roland Berger Advisory Board in Spain. We wanted to try and find out how they managed to do that over the last 15 years, and we came to the conclusion that government and entrepreneurs created a plan for the corporate landscape. They started thinking about establishing at least one national champion in each of the key industries (energy, petroleum, gas, banking and telecommunications) as early as 1990. And they used the banks as the small, but hard center to create a minimum of cohesion and vision for this development. And, quite importantly, this was done by increasing competition. How was this project designed? At a round table, with no journalists around, between six or seven persons. And there have been few changes to this group over the years. Do you think this would be a viable strategy for Portugal? I think it is one that should have been implemented already. But we still have time to act. I don't think it's logical that over the last 20 years, no Portuguese company has made any major acquisition in Spain. We are lacking aggressive strategies. We are always undecided. But if we don't act now, we won't have any national champions. What would be the government's role at this round table? It would act as regulator, and it would mobilize entrepreneurs and promote competition and corporate governance, acting as role model through the companies it holds interests in or has influence on. What message would you like to convey with this analysis? I would like to tell entrepreneurs and managers that they are not very aggressive and their strategies lack ambition. The Iberian market is a minimum domestic market and I don't see why we don't make acquisitions in Spain. And if we don't move into Central and Eastern Europe now, in four years time everything will be much more stabilized already. And the same can be said about China. With this award, I want to call attention to the fact that we need to think much bigger. This article was published in Jornal de Negócios on 19 September 2005 in its original language, Portuguese. If you have any questions, please don't hesitate to contact us:  | ||||||
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